Energy market 'does not value low carbon'

11 June 2014

The UK's energy market "does not work", according to the head of the country's transmission system operator. Market intervention is therefore needed to ensure that low-carbon energy generation and security of supply are properly valued, he said.

Speaking in London yesterday, National Grid CEO Steve Holliday told the UK Energy 2014 meeting that the UK government's Electricity Market Reform package is "the right intervention at the right time." Holliday said it would address the twofold challenge currently facing the electricity market: firstly, "the energy market today does not value low carbon," and "secondly, it is crystal clear that very few markets place a true value on security of supply."

One of the main mechanisms of the reforms is the Contracts for Difference (CfD) scheme, which is designed to encourage investment in low-carbon technologies, including nuclear, by guaranteeing future revenue streams and thereby reducing risks to investors.

Speaking at the same event, EDF Energy CEO Vincent de Rivaz referred to the ongoing state aid investigation by the European Commission into the terms of the CfD negotiated between EDF Energy and the government for the proposed Hinkley Point C nuclear power plant. He said that his company has "a strong case" and claimed that the proposal is compliant with all the state aid rules of the European Union. De Rivaz noted that member states have the right to choose their own energy mix and that Hinkley Point C would help address the challenges of security of supply, climate change and affordability.